Blockchain advocacy group The Digital Chamber has launched a new unit focused on supporting prediction markets and helping gain regulatory clarity for the sector in the US.
In an announcement via X on Tuesday, The Digital Chamber unveiled the Prediction Markets Working Group, outlining a multi-year plan to bring clarity to what it called a “misunderstood segment of finance.”
The Digital Chamber said the first course of action was sending a letter to Commodity Futures Trading Commission (CFTC) chairman Mike Selig praising his efforts to maintain federal jurisdiction over prediction markets, while also calling for an end to regulation by enforcement.
“In our letter, we applauded Chair Selig’s recent statements regarding the intent for CFTC staff to provide tailored rulemaking and guidance for this rapidly growing segment of the financial and digital asset industries,” The Digital Chamber said.
“For too long, operators in this space have navigated a maze of regulatory ambiguity including unclear overlaps between federal and state regulators,” it added.
Source: The Digital Chamber
Moving forward, the group plans to continue engaging with the CFTC, develop policy principles, submit policy recommendations, publish research and build a coalition of industry stakeholders and participants.
It also mentioned “participating in litigation” via friend-of-the-court briefings to educate courts on what it deems the “CFTC’s historic regulatory exclusivity” over the sector.
Prediction markets are heading to court
The move comes amid intense scrutiny of the sector from state governments and regulators.
Kalshi, one of the leading prediction market platforms, was hit with a civil enforcement action by the Nevada Gaming Control Board on Tuesday. The gaming board is calling for an injunction to stop Kalshi from offering “unlicensed wagering” in the state.
Both Kalshi and competitor Polymarket have seen multiple state regulators push to stop them from offering markets such as sports contracts in their respective states, arguing that they are offering unlicensed gambling products.
Last week, Polymarket filed a federal lawsuit against the state of Massachusetts to preemptively block any potential enforcement action, arguing that the CFTC has primary oversight over the sector, not state governments.
The CFTC chair has also been echoing such sentiments recently, urging state governments to respect the CFTC’s authority and oversight over the sector or risk facing them in court.
“Prediction markets aren’t new — the CFTC has regulated these markets for over two decades,” Selig emphasized in a video posted to X on Monday.
Responding to Selig on Tuesday, Utah Governor Spencer Cox welcomed any possible legal stoushes with the CFTC, labeling prediction markets as a form of gambling, which is “destroying the lives” of Americans.
“Mike, I appreciate you attempting this with a straight face, but I don’t remember the CFTC having authority over the ‘derivative market’ of LeBron James rebounds. These prediction markets you are breathlessly defending are gambling—pure and simple.”